Globalization and Its Critics

September 2002 » Historically Speaking19 Globalization and Its Critics Jay R. Mandle Today'seconomicglobalizationmeans that no country is so remote that firms will be dissuaded from setting up production facilities in itbecause oflocation considerations alone. Advances in communications technologynowallowcorporations to make investment decisions with little attention accorded to distance as a limiting constraint This, together with advances in education in poor countries, means that today modernproduction increasinglyisundertaken in nations that previously were bypassed by the process ofeconomic development. The resulting change in the structure of global production is profound. In 1970, 3% ofmanufactured goods originated in developing countries. Twenty years later that share was 18%, and today it is even higher. The image ofpoor countries as confined to supplying agricultural goods or raw materials no longer corresponds to reality. With this shift has come an acceleration ofeconomicgrowth. Between 1990 and 1998 economic growth in the thirteen largest poor countries averaged 7.3% per year, higher dian in any prior correspondingperiod —rapid growdi byanystandard . TheUnited States, farmore diananyodier country, has had a decisive voice in determiningthe contentofdie policies and procedures that have accompanied globalization. It has been and still is dominant in multilateral organizations such as the World Bank and the InternationalMonetaryFund, and die United States was the most powerful influence in shapingdie contentofdie rules diatdieWorld Trade Organization (WTO) today enforces. The position ofthe United States has been remarkablyconsistent overthe years: remove controls over domestic markets as part of a process ofminimizingdie role ofgovernment in the economy, reduce barriers to imports, and welcome foreign investment. The transition from Republican administrations in the 1980s to Democratic ones in the 1990s produced no change in fundamentals, and the same is proving to be true ofdie administration ofGeorge W Bush. This policy orientation has been responsible for important successes. The acceleration in growth rates has occurred at least in part because policies to free foreign direct investment have assisted some countries in increasingtheirproductive capacitymorerapidlythan ifsuch flows were less available. And the liberalization of trade has advanced the interests ofconsumers throughouttheworld. Increased imports and exports have allowed for greater choice and lower prices. Unfortunately, this policy orientation has had its downside as well. This is particularly truewidi regard tointernational financialmarkets . The hypermobilityofportfolio funds (die purchase ofbonds, stocks and other financial instruments)has been diesource ofglobal economicinstability . TheAsian financial crisisof 1997-98 was onlydie most dramaticofa series of setbacks that has resulted in damaging, though temporary, economic reversals. Similarly , because the public sector has been reduced, governmentshave notprovided adequate cushioning against the personal dislocations diatglobalization causes. Though economic globalization has generally raised income levels, itdoesnotprovideprotectionto diose caughtin and damaged bydiewhirlwind ofchange unleashed by the global economic restructuring it causes. Itis not too late to reform globalization to makeitmorejust Itsinstitutionsarestillunder construction, and it is therefore possible to reduce dieirone-sided emphasis ondiemobilityofproducts and capital.The rules andstructures that govern the emerging international economic system remain embryonic and could be adjusted to ameliorate die costsinflicted on the innocent victims of economic progress. Globalization, like all marketsystems, requires extra-market systems ofsupport and protection . Whatis needed is a politics to make globalization both more equitable and stable. The problem is that while the United States has been consistent and clear—if one-sided—in its vision of what globalization should look like, die critics and potential agents ofglobal reform have been anything but Generally it is fair to say that there is more agreement among anti-globalization activists over what they do not like than on what diey positively advocate. Inpartdiisfailingresultsfromdie factdiat manywhoopposeglobalizationarehostilenot simply to it, but radier to market economies altogether. Indiepast, dieseindividualswould have advocated an internationalist socialism. Butsuchanappealisofcoursenolongerpoliticallytenable . In die lightofdie experience of the Soviet bloc, it is not credible to maintain that globalization could flourish with the means ofproduction publicly owned. Such critics, therefore, are deprived ofthe positive vision that animated radicals in the past: an international commonwealth ofcooperating economies in which decisions are motivated not by private interests but by the goal of advancing the public's well-being. Wididiesocialistprojectabandoned, antiglobalization thought, at least in the United States, tends to cluster around two sets of approaches. Activists argue that die United Statesshouldtakeondie responsibilityofmaking globalization more fair, or, alternatively, globalization should be rejected altogether. Advocates ofthe formerargue...